It’s one of the more peculiar market moves when considering escalating geopolitical tensions in general. However, this one has more to do with the situation with the oil market than any risk environment. Fears of oil supply being restricted from the Middle East is the main concern here, where Japan notably gets all of its energy imports from. And higher oil prices as such is also not treating Japan well in this regard. So, it’s more of a case of what the trading focus is.
The moves we’re seeing so far today points to the notion that markets are still perhaps seeing the US intervention as being a contained situation. That’s reflected in just a mild decline in equities, with S&P 500 futures down just 10 points or by 0.17% currently.
The dollar is also higher across the board, so that’s helping to underpin USD/JPY slightly but the larger part of the move seems more tied up to concerns surrounding the oil market.
EUR/USD is down just 0.2% to 1.1500 while AUD/USD is down 0.6% to 0.6410 at the moment. So, that indicates the breadth of the move we’re seeing in USD/JPY as we get into European trading.
Looking at the pair itself, the move higher is now pushing past the 100-day moving average (red line) of 146.78. That is helping buyers push back against a more bearish bias in the pair since February
